2.1 SWOT Analysis 2.1.

1 Strengths Jean Yip Group has been established in Singapore for 27 years (Sim 2003). The numerous years of experience in the beauty services industry has given the company an added advantage when breaking into a new environment. The group has also ventured into Indonesia and Malaysia and the cultural experiences learnt from these Muslim populated countries would provide valuable lessons when entering the similarly cultured Dubai market. Also, Jean Yip has its own academy which provides training for staffs as well as to supply potential candidates for future business expansion purposes. Its own GMP manufacturing plant provides vertical integration (Ouden et al. 1996), ensure consistent quality and will be more cost-saving in the long run. 2.1.2 Weaknesses Being a new brand in the region, Jean Yip may suffer as company reputation is totally unknown to the locals. The absence of word-of-mouth, an important aspect especially in the service sector, may deter consumers from venturing out of their comfort zone to find another good hair stylist. The lack of in-depth local cultural and consumer behaviour knowledge may pose another challenge to the group as poor intelligence may decrease promotion and sales force effectiveness, not to mention the market research process is normally timely and costly. 2.1.3 Opportunities Opportunities reviewed using Ansoffs product-market expansion grid is a useful framework to achieve growth (Ansoff 1958). With the biggest number of free zones supported by good infrastructure, JYP can achieve market-penetration through Dubais strategic location to gain a strong foothold in the region. Thereafter, business can be further expand to other states like Abu Dhabi as well as neighbouring countries such as Bahrain where consumers have high disposable income (Mohammed 2007). Product-development can be achieved by bringing in other beauty services in a new superior way as a point of difference (Kotler et al. 2009) to the current market segment. For market-development, a sub-brand can be created to provide a basic, no-frills hair cut to the 16% of collective labour segment at a lower rate (UAEInteract 2009).

2.1.4 Threats Geographically situated in the volatile Middle East region, Dubai increased its risk profile substantially as the region is more susceptible to war and terrorism. On the macroeconomics level, economic instability can decrease consumers spending power, especially in the beauty sector. As the world is currently slumping in credit crisis, Dubai is no exception. This may impact the sales of JYP which is entering the market as a premium beauty salon. Also, Islamic culture may prevent some local women from going for the beauty services as it meant certain part of the body exposed to outsiders, which is forbidden in the conservative culture. Whereas on the microeconomics level, well-established competitors such as Franck Provost and Toni & Guy may pose as a direct threat as they are more well-established in the city state and may prevent JYP from gaining a strong foothold in the market. With a low entry barrier, new entrants to this lucrative sector may dilute market share and decrease profit. 2.2 STEEP Analysis 2.2.1 Socio-cultural United Arab Emirates has a total population of 4,798,491 as at July 2009 (Central Intelligence Agency 2009). The number of Muslim living in the country constitutes 62% (2.8million) of the population while Islam governs everyday events ranging from what they consume to how they should behave (Government of Dubai 2009). The country will continue to grow at a rate of 3.69% per annum (ranked number 1 compared to 223 countries). Dubai makes up a quarter of the UAE population with 1,596,000 residents living in the state (Central Intelligence Agency 2009). The breakdown of the population in Dubai shows that expatriate makes up of 73% of their total population, which had inevitably influenced how the majority dresses and presented themselves (UAEInteract 2009). These days, fashion has become a demonstration of social status as people are getting judged on how they look and dress. Dubai which holds the biggest population within UAE proved to be a highly potential market for any investor to tap into. 2.2.2 Technology The ability to transfer information and resources efficiently between two countries while saving cost can increase ones competitive advantage (Czinkota 2008). The commitment of the UAE government towards technological advances can be seen through its willingness to spend

US$3.1billion on information technology (IT) in 2008 (UAEInteract 2009). Records had also shown the dominance of UAE in terms of its IT development within the Arab world as it is recognized as the most connected country in the region. These facts provide JYP the opportunity to reach out to the mass public through interactive means where other marketing tools might not be able to reach. The spending on IT is expected to rise to US$4.7billion by 2013 as the country steers toward a technology-driven knowledge economy. 2.2.3 Economic Growth and Stability The economic instability of the current market worldwide has affect consumer confidence and spending behaviour, causing consumers to tighten their belt on unnecessary spending. However, Dubai records a 7.4% economy growth from AED730 billion to AED934 billion in 2008 despite the economic downturn (UAEInteract 2009). The UAE government had also recognised that the expansion of the services sector is essential toward its country economic growth, constituting 74% to its GDP since 2005 (Rahman 2009). The profitability ratio in the service sector are been seen as a good opportunity for JYP to bring its premium services into the Dubai market. 2.2.4 Environmental The arid climate of Dubai means that high temperature can be expected for most of the year. Temperature ranged from 10C during winter to a staggering 41C during summer (Explorer 2007). The fact that Dubai is a scorching hot place to live in opens the door for beauty salon such as JYP to provide regular haircuts and maintenance to its consumer. Another issue Dubai faced is the fact that environment is deteriorating due to the intensive construction projects such as Palm island. Recognising this, JYP will play its part in the conservation of the environment by offering hairs that are cut to wig manufacturer rather than disposing it. 2.2.5 Political UAE has been enjoying a desirable degree of political stability since its formation in 1971 (UAEInteract 2009). As the government operates in a constitutional monarchy system, the nonexistents of any other political party meant that any risk of political unrest will be minimised. UAE federal government commits to maintain its stability through the UAE government strategy (Appendix B) launched in 2007 (UAEInteract 2009).

Apart from the political stability that UAE enjoys, foreign investors from Singapore are encouraged by the signing of The Cooperation Council for the Arab States of the Gulf-Singapore free trade agreement which will further loosen the minimum restrictions in terms of tax law, tariffs and controls by the government (International Enterprise Singapore 2008). Although corporate tax are still chargeable at a 14% rate (Dubai Statistics Centre 2009), the government allows 100% repatriation of capital and profits while placing no restriction on foreign exchange controls and trade quotas (Government of Dubai 2009). 3.0. Competition 3.1 Porters five forces To better formulate a business strategy, the use of Porters five forces (Porter 1980) will help identify problem (Appendix C) to evaluate JYPs strategic position in Dubai. 3.1.1 Threat of New Entrants With 241 registered hair salons in Dubai (Dubai Yellow Pages 2009), the beauty industry in Dubai proved to be a lucrative market that has a low barrier entry. JYP are facing an oligopolistic situation where neither one brand dominates the market. Therefore, it may have to capture their portion of the consumer market and establish a loyal customer base. As compare to new foreign entrants, JYP stands an advantage due to its overseas experience gathered through its expansion into Malaysia and Indonesia, which shares similar cultural aspects to Dubai. 3.1.2 Competitive Rivalry within the Industry The rivalry within the beauty industry is relatively competitive in Dubai. JYP has to face tough competition against brands such as Franck Provost, Toni & Guy and local established brands such as JetSet. Most of the local competitors are of small scale business targeting at middle or lower income residents. Such competitors could post a threat as they can easily create a price war, which may affect JYP in winning over its fair-weather consumers. In order to defend itself from such threat, JYP has to identify the correct target segment matched with the appropriate marketing strategies to fulfil its target audience upon entering the market. 3.1.3 Bargaining Power of Customers With over 241 hair salons in Dubai (Dubai Yellow Pages 2009), consumers will tend to react more sensitively to price change due to the similarity in terms of services offered. Hence at the

initial stage, service quality should be the main tool focus to differentiate JYP from its competitors. The delivery of excellence services to its customer will increase perceived value and in turn, reduced the financial risk attached to buying JYPs services. 3.1.4 Bargaining Power of Suppliers To reduce the dependency on suppliers, JYP has engaged in research and development to establish its own hair care products line by working with manufacturers that undertake private label production. Furthermore, JYP has its own training academy and also, a strong workforce of 600 professional hair stylists for its team (Jean Yip Group 2008). 3.1.5 Threat of Substitute Products With the advancement of technology, people are concern with the numerous chemical concoctions used in their daily necessities (Emirates Woman 2009). Hence, consumers favour salons that utilise natural ingredients. JYP is quick to identify this trend and developed a range of herbal hair care products, which uses only 100% Chinese herbs (Herbal De Orient n.d.). This can reduce the threat of existing and emergence of substitute products. 3.2 Perceptual Mapping

JYP is closely positioned in the same grouping as the Dubai hair market leaders such as Franck Provost and Toni & Guy. These 3 brands reflected similar characteristics, with Franck Provost ranked the most expensive and high quality salon. Hence, JYP stands a high chance in targeting the potential high-end consumer market in Dubai with its positioning as a family hub that seeks to serve the entire family with competitive pricing and quality service.

4.0 Keys to Success Overcoming the cultural barrier remains to be one of the key challenges faced by JYP operating in Dubai. To gain acceptance from the public, it is crucial for JYP to cater its marketing mix to the locals. Therefore, the key to success will lies on its positioning strategy, for JYP to be seen as a world-class beauty salon with emphasis on family orientation.